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Steel giant ArcelorMittal (MT - Free Report) logged a net income of $1,322 million or $1.29 per share in second-quarter 2017, as against net earnings of $1,112 million or $1.13 per share recorded a year ago. Adjusted earnings came in at $1.33 per share, topping the Zacks Consensus Estimate of 78 cents.
 
Revenues went up 17% year over year to $17,244 million in the quarter on the back of higher seaborne iron ore prices and steel prices, partly offset by lower steel and iron ore shipments. Sales surpassed the Zacks Consensus Estimate of $16,851 million.
 
Total steel shipments fell 2.8% year over year to 21.5 million metric tons in the reported quarter. Average steel selling prices went up 21.5% year over year.
 
ArcelorMittal Price, Consensus and EPS Surprise
 
NAFTA: Crude steel production inched up 0.5% year over year to 5.8 million metric tons in the second quarter. Steel shipments dipped 0.4% year over year to 5.4 million metric tons. Sales rose 17.5% year over year to $4,607 million. Average steel selling price rose 15.2% year over year.
 
Brazil: Crude steel production went down 3.1% year over year to 2.7 million metric tons. Shipments went down roughly 2.5% year over year to 2.6 million metric tons. Sales increased 23.3% year over year to $1,834 million. Average steel selling price rose 27.2% year over year.
 
Europe: Crude steel production rose roughly 2.6% year over year to 11 million metric tons in the reported quarter. Shipments fell 3.9% year over year to 10.5 million metric tons. Sales increased about 17.5% year over year to $9,180 million while average steel selling price rose 24.2%.
 
Asia Africa and CIS (ACIS): Sales rose 16% year over year to $1,834 million. Crude steel production came in at 3.7 million metric tons, down 6.1% year over year. Average selling prices increased 22% year over year.
 
Mining: Iron ore production increased 8.9% year over year to 14.7 million metric tons. Coal production rose 14.3% year over year to 1.6 million metric tons. Revenues went up 25.5% year over year to $1,015 million.
 
Balance Sheet
 
Cash and cash equivalents (including restricted cash) came in at $2.3 billion as of Jun 30, 2017, down 4.2% year over year.
 
The company’s long-term debt was around $10,220 million as of Jun 30, 2017, down 27.1% year over year. Net debt decreased to $11.9 billion at the end of the second quarter from $12.7 billion a year ago.
 
Net cash provided by operating activities was roughly $1,214 million in the reported quarter.
 
Guidance
 
ArcelorMittal now expects global apparent steel consumption (ASC) to rise 2.5–3% year over year in 2017, up from earlier growth expectation of 0.5-1.5%. 
 
In the U.S., the company sees apparent steel consumption growth of 2–3% in 2017, down from the previous forecast of 3-4% due to lower automotive production impacting flat products. The company also anticipates modest growth (0.5–1.5%) in apparent steel consumption in Europe. Moreover, apparent steel consumption is forecasted to rise 2–3% in Brazil, down from the previous forecast of 3-4% as sustained weakness in construction is partly offset by modest improvement in consumer confidence and automotive demand. Apparent steel consumption in China is expected to grow 2.5–3.5%, up from previous forecast of -1.0– 0% owing to strength in real estate and machinery.
 
The company expects capital expenditure to be around $2.9 million in 2017. Cash needs of the business are expected to be around $4.6 billion in 2017, down from $5 billion expected earlier.
 
Price Performance
 
ArcelorMittal’s shares have rallied 40.4% in the last three months, outperforming the industry’s gain of 5.4%.
 
 
Zacks Rank & Stocks to Consider
 
ArcelorMittal currently carries a Zacks Rank #3 (Hold).
 
Some better-ranked companies in the basic material space include Akzo Nobel N.V. (AKZOY - Free Report) , Arkema S.A. (ARKAY - Free Report) and Hitachi Chemical (HCHMY - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Akzo Nobel has an expected long-term earnings growth of 11.1%.
 
Arkema has an expected long-term earnings growth of 12.4%.
 
Hitachi Chemical has an expected long-term earnings growth of 5%.
 
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